Engineering firm Dessau blacklisted

Kevin Dougherty, GAZETTE QUEBEC BUREAU CHIEF06.20.2013

An agent from the Competition Bureau enters a building that houses the offices of Dessau, an engineering company in Laval north of Montreal, in November. Dessau has been suspended from bidding on government contracts.

MONTREAL — Engineering firm Dessau Inc. and its sister construction company, Verreault Inc., have been blacklisted under Quebec legislation to restore integrity, meaning — in principle — they cannot bid on any public-sector contracts in Quebec for five years.

But at a news conference in Montreal on Friday, a day Dessau was quietly listed as ineligible, Treasury Board President Stéphane Bédard outlined a “rehabilitation” process that could allow Dessau to re-start bidding on provincial, municipal and other public contracts by the end of this year.

Bill 1, the first legislation presented by the Parti Québécois government last fall, aims to restore integrity in Quebec’s construction sector after allegations that collusion by contractors was boosting the cost of public-sector contracts by as much as 30 per cent.

At the Charbonneau Commission into construction corruption, Dessau executives, as well as executives from other engineering and construction companies, were grilled about alleged collusion and construction in the industry. Dessau’s name has come up often at the inquiry, but so have the names of other high-profile engineering firms.

An AMF official said that about 150 to 200 companies are being examined.

Bill 1 applies to public-sector contracts worth $40 million and over. Before they bid, companies must submit an “application for authorization” with the AMF.

This fall, the contract threshold for Bill 1’s integrity process will be lowered to $10 million and Bédard said that in three years, all companies bidding on public contracts worth $100,000 and more will be vetted.

Dessau and Verreault have been informed as to why the AMF has rejected their application, but this information is not public.

AMF spokesman Sylvain Théberge said Dessau can go back to the watchdog after 90 days and present evidence that it has made reforms.

A Treasury Board official said the AMF review would take “a few weeks” in addition to the 90-day delay. But in a news release, Dessau said 90 days “is quite a long period and significant repercussions will be inevitable,” including “short-term layoffs.”

Dessau says it is Canada’s sixth-largest engineering company, with 5,000 employees, 3,700 of them in the province.

Bédard said each case would be analyzed individually and the government wants to maintain engineering expertise in the province.

But he also said that since Bill 1 was adopted, “honest companies” previously excluded from the bidding process have been winning contracts, and the cost to taxpayers has been lower.

To be allowed back into the bidding process, companies like Dessau must:

Exclude managers and directors deemed at fault;

Stop fraudulent business practices;

Pay unpaid taxes;

Implement sound management practices, good governance and an ethical framework;

Implement control measures.

Bédard warned that a company that goes through the rehabilitation process, then falls back into corrupt practices will be severely dealt with.

“Our goal is to protect honest businesses,” the minister said. “There will be no easy way out.”

Bédard also said the government would allow companies found at fault to complete contracts already underway, but that the AMF would name an external auditor to oversee the work to ensure good governance and ethical practices are respected.

Timeline:

March25: Rosaire Sauriol resigns as senior VP at Dessau after testifying before theCharbonneau Commission. Sauriol admitted to using false company invoices tofunnel $2 million to political parties.

May9: Sauriol is arrested with 36 others in Laval, charged in connection with asystem of collusion in the city. Serge Duplessis, also a former employee of thefirm, is arrested and charged as well.

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